Genesco Reports Second Quarter Fiscal 2011 Results
NASHVILLE, Tenn., Sept 01, 2010 /PRNewswire via COMTEX/ --
Genesco Inc. (NYSE: GCO) today reported a loss from continuing operations for the second quarter ended July 31, 2010, of $2.4 million, or $0.10 per diluted share, compared to a loss from continuing operations of $2.7 million, or $0.12 per diluted share, for the second quarter ended August 1, 2009. Fiscal 2011 second quarter earnings reflected pretax charges of $3.2 million, or $0.08 per diluted share, primarily related to fixed asset impairments, purchase price accounting adjustments, a loss related to the Nashville flood and acquisition expenses. Fiscal 2010 second quarter earnings reflected pretax charges of $3.3 million, or $0.10 per diluted share, primarily related to fixed asset impairments.
Adjusted for the listed items in both periods, the loss from continuing operations was $0.5 million, or $0.02 per diluted share, for the second quarter of Fiscal 2011, compared to a loss of $0.4 million, or $0.02 per diluted share, for the second quarter of Fiscal 2010. For consistency with Fiscal 2011's previously announced earnings expectations and the adjusted results for the prior period announced last year, neither of which reflected the listed items, the Company believes that disclosure of earnings from continuing operations adjusted for those items will be useful to investors. A reconciliation of the adjusted financial measures to their corresponding measures as reported pursuant to U.S. Generally Accepted Accounting Principles is included in Schedule B to this press release.
Net sales for the second quarter of Fiscal 2011 increased 9% to $364 million from $335 million the second quarter of Fiscal 2010. Comparable store sales in the second quarter of Fiscal 2011 increased by 3%. The Lids Sports Group's comparable store sales increased by 7% and the Journeys Group by 2%, while Johnston & Murphy Retail's comparable store sales were flat and the Underground Station Group declined 4%. Robert J. Dennis, chairman, president and chief executive officer of Genesco, said, "Our second quarter results were in line with our expectations, with a same store sales increase for the Company, thanks to increases in the Lids Sports Group and Journeys Group. Increases in incentive compensation accruals related to improved performance masked declines in store occupancy cost and other key expense items as a percent of sales.
"The Back-to-School season has been strong for us so far, with comparable store sales up 8% for August. While we expect this trend to moderate as we proceed through the third quarter, this is an encouraging start to the second half of the year."
Dennis also reaffirmed the Company's outlook for Fiscal 2011. "We are reiterating our Fiscal 2011 outlook for full year earnings between $2.10 and $2.20. Consistent with previous years, this guidance does not include expected non-cash asset impairments and other charges, which are projected to be approximately $10 million to $12 million, or $0.26 to $0.31 per share, in Fiscal 2011. This guidance assumes comparable sales in the low single digits for the second half."
Dennis concluded, "We are pleased with the overall pace of our business as we pass the halfway mark of Fiscal 2011. Our Lids Sports segment continues to expand and diversify, creating new market opportunities and greater economies of scale. Meanwhile, we believe we have some distinct product advantages in Journeys that should drive comparable store sales gains and improved profitability over the next few quarters."
Conference Call and Management Commentary
Beginning with these quarterly results, the detailed, financial commentary formerly delivered by the chief financial officer will be posted in writing on the Company's website, www.genesco.com, in the investor relations section. The Company's live conference call on September 1, 2010, at 7:30 a.m. (Central time) may be accessed through the Company's internet website, www.genesco.com. To listen live, please go to the website at least 15 minutes early to register, download and install any necessary software.
Cautionary Note Concerning Forward-Looking Statements
This release contains forward-looking statements, including those regarding the performance outlook for the Company and its individual businesses, and all other statements not addressing solely historical facts or present conditions. Actual results could vary materially from the expectations reflected in these statements. A number of factors could cause differences. These include adjustments to estimates reflected in forward-looking statements, including the timing and amount of non-cash asset impairments, the Company's ability to continue to complete acquisitions, expand its business and diversify its product base, continuing weakness in the consumer economy, inability of customers to obtain credit; fashion trends that affect the sales or product margins of the Company's retail product offerings; changes in buying patterns by significant wholesale customers; bankruptcies or deterioration in financial condition of significant wholesale customers; disruptions in product supply or distribution, including continuation or worsening of recent manufacturing and shipping delays affecting Chinese product in particular; unfavorable trends in fuel costs, foreign exchange rates, foreign labor and materials costs, and other factors affecting the cost of products; competition in the Company's markets; and changes in the timing of holidays or in the onset of seasonal weather affecting period-to-period sales comparisons. Additional factors that could affect the Company's prospects and cause differences from expectations include the ability to build, open, staff and support additional retail stores and to renew leases in existing stores and to conduct required remodeling or refurbishment on schedule and at expected expense levels, deterioration in the performance of individual businesses or of the Company's market value relative to its book value, resulting in impairments of fixed assets or intangible assets or other adverse financial consequences, unexpected changes to the market for our shares, variations from expected pension-related charges caused by conditions in the financial markets, and the outcome of litigation, investigations and environmental matters involving the Company. Additional factors are cited in the "Risk Factors," "Legal Proceedings" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of, and elsewhere in, our SEC filings, copies of which may be obtained from the SEC website, www.sec.gov, or by contacting the investor relations department of Genesco via our website, www.genesco.com. Many of the factors that will determine the outcome of the subject matter of this release are beyond Genesco's ability to control or predict. Genesco undertakes no obligation to release publicly the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Forward-looking statements reflect the expectations of the Company at the time they are made. The Company disclaims any obligation to update such statements.
About Genesco Inc.
Genesco Inc., a Nashville-based specialty retailer, sells footwear, headwear, sports apparel and accessories in more than 2,260 retail stores in the United States and Canada, principally under the names Journeys, Journeys Kidz, Shi by Journeys, Johnston & Murphy, Underground Station, Hatworld, Lids, Hat Shack, Hat Zone, Head Quarters, Cap Connection and Sports Fan-Attic and on internet websites www.journeys.com, www.journeyskidz.com, www.shibyjourneys.com, www.undergroundstation.com, www.johnstonmurphy.com, www.dockersshoes.com, and www.lids.com. The Company also sells footwear at wholesale under its Johnston & Murphy brand and under the licensed Dockers brand. Additional information on Genesco and its operating divisions may be accessed at its website www.genesco.com.
GENESCO INC.
Consolidated Earnings Summary
=============================
Three Months Ended Six Months Ended
------------------ ----------------
July 31, August 1, July 31, August 1,
In Thousands 2010 2009 2010 2009
------------ ---- ---- ---- ----
Net sales $363,654 $334,658 $764,507 $705,024
Cost of
sales 179,610 164,713 372,392 345,857
Selling and
administrative
expenses* 185,465 169,509 376,542 351,800
Restructuring
and other,
net 2,001 3,320 4,444 8,293
------------- ----- ----- ----- -----
(Loss)
earnings
from
operations (3,422) (2,884) 11,129 (926)
Loss on
early
retirement
of debt - - - 5,119
Interest
expense,
net 227 951 462 3,112
--------- --- --- --- -----
(Loss)
earnings
from
continuing
operations
before
income
taxes (3,649) (3,835) 10,667 (9,157)
Income tax
(benefit)
expense (1,253) (1,172) 4,500 (891)
---------- ------ ------ ----- ----
(Loss)
earnings
from
continuing
operations (2,396) (2,663) 6,167 (8,266)
Provision
for
discontinued
operations (787) (59) (734) (218)
------------- ---- --- ----
Net (Loss)
Earnings $(3,183) $(2,722) $5,433 $(8,484)
========== ======= ======= ====== =======
*For the three months and six months ended August 1, 2009, bank fees
of $0.9 million and $1.8 million, respectively,
were reclassified from interest expense to selling and administrative
expenses to conform to the current year
presentation.
Earnings Per Share Information
Three Months Ended Six Months Ended
July
July 31, August 1, 31, August 1,
In Thousands
(except per
share amounts) 2010 2009 2010 2009
--------------- ---- ---- ---- ----
Preferred
dividend
requirements $49 $49 $98 $99
Average common
shares -Basic
EPS 23,480 21,798 23,471 20,326
Basic earnings
(loss) per
share:
Before
discontinued
operations ($0.10) ($0.12) $0.26 ($0.41)
Net (loss)
earnings ($0.14) ($0.13) $0.23 ($0.42)
Average common
and common
equivalent
shares -
Diluted EPS 23,480 21,798 23,902 20,326
Diluted earnings
(loss) per
share:
Before
discontinued
operations ($0.10) ($0.12) $0.25 ($0.41)
Net (loss)
earnings ($0.14) ($0.13) $0.22 ($0.42)
GENESCO INC.
Consolidated Earnings Summary
Three Months Ended Six Months Ended
July 31, August 1, July 31, August 1,
In
Thousands 2010 2009 2010 2009
---------- ---- ---- ---- ----
Sales:
Journeys
Group $152,967 $148,592 $334,858 $325,439
Underground
Station
Group 17,144 18,561 43,217 45,289
Lids Sports
Group 132,582 108,830 252,570 207,634
Johnston &
Murphy
Group 39,065 39,054 83,602 78,384
Licensed
Brands 21,514 19,402 49,656 47,953
Corporate
and Other 382 219 604 325
--- --- --- ---
Net Sales $363,654 $334,658 $764,507 $705,024
========= ======== ======== ======== ========
Operating
Income
(Loss):
Journeys
Group $(4,526) $(3,159) $4,556 $2,354
Underground
Station
Group (3,470) (3,789) (2,705) (4,239)
Lids Sports
Group 11,951 10,526 21,743 17,050
Johnston &
Murphy
Group 105 (459) 2,378 (302)
Licensed
Brands 2,259 1,987 6,891 5,604
Corporate
and Other* (9,741) (7,990) (21,734) (21,393)
----------- ------ ------ ------- -------
(Loss)
earnings
from
operations (3,422) (2,884) 11,129 (926)
Loss on
early
retirement
of debt - - - 5,119
Interest,
net 227 951 462 3,112
--------- --- --- --- -----
(Loss)
earnings
from
continuing
operations
before
income
taxes (3,649) (3,835) 10,667 (9,157)
Income tax
(benefit)
expense (1,253) (1,172) 4,500 (891)
---------- ------ ------ ----- ----
(Loss)
earnings
from
continuing
operations (2,396) (2,663) 6,167 (8,266)
Provision
for
discontinued
operations (787) (59) (734) (218)
---- --- ---- ----
Net (Loss)
Earnings $(3,183) $(2,722) $5,433 $(8,484)
*Includes a $2.0 million charge in the second quarter of Fiscal 2011
which includes $1.9 million for asset impairments and $0.1 million
for other legal matters and includes $4.4 million of other charges
in the first six months of Fiscal 2011 which includes $4.3 million
for asset impairments and $0.1 million for other legal matters.
Includes $3.3 million of other charges in the second quarter of
Fiscal 2010 which includes $3.4 million in asset impairments offset
by a $0.1 million gain from other legal matters and includes $8.3
million of other charges in the first six months of Fiscal 2010
which includes $7.9 million in asset impairments, $0.3 million in
other legal matters and $0.1 million for lease terminations.
GENESCO INC.
Consolidated Balance Sheet
==========================
July 31, August 1,
In Thousands 2010 2009
------------ ---- ----
Assets
Cash and cash equivalents $49,037 $21,457
Accounts receivable 31,005 28,251
Inventories 377,380 332,917
Other current assets 60,138 59,986
-------------------- ------ ------
Total current assets 517,560 442,611
-------------------- ------- -------
Property and equipment 200,767 228,712
Other non-current assets 211,207 182,678
------------------------ ------- -------
Total Assets $929,534 $854,001
============ ======== ========
Liabilities and Shareholders'
Equity
Accounts payable $165,466 $119,891
Other current liabilities 78,635 60,156
------------------------- ------ ------
Total current liabilities 244,101 180,047
------------------------- ------- -------
Long-term debt - 53,042
Other long-term liabilities 106,119 111,981
Shareholders' equity 579,314 508,931
-------------------- ------- -------
Total Liabilities and
Shareholders' Equity $929,534 $854,001
===================== ======== ========
GENESCO INC.
Retail Units Operated -Six Months Ended July 31, 2010
Balance Acquisi-
01/31/09 tions Open Close
-------- ----- ---- -----
Journeys Group 1,012 0 19 6
Journeys 816 0 9 6
Journeys Kidz 141 0 9 0
Shi by Journeys 55 0 1 0
Underground
Station Group 180 0 0 10
Lids Sports Group 885 38 35 37
Johnston & Murphy
Group 157 0 7 4
Shops 114 0 5 3
Factory Outlets 43 0 2 1
--------------- --- --- --- ---
Total Retail
Units 2,234 38 61 57
------------ ----- --- --- ---
Balance Balance
01/30/10 Open Close 07/31/10
-------- ---- ----- --------
Journeys Group 1,025 7 6 1,026
Journeys 819 5 5 819
Journeys Kidz 150 2 1 151
Shi by Journeys 56 0 0 56
Underground
Station Group 170 0 8 162
Lids Sports Group 921 11 16 916
Johnston & Murphy
Group 160 3 3 160
Shops 116 2 3 115
Factory Outlets 44 1 0 45
--------------- --- --- --- ---
Total Retail
Units 2,276 21 33 2,264
------------ ----- --- --- -----
Retail Units Operated -Three Months Ended July 31, 2010
========================================================
Balance Balance
05/01/10 Open Close 07/31/10
-------- ---- ----- --------
Journeys Group 1,023 4 1 1,026
Journeys 817 3 1 819
Journeys Kidz 150 1 0 151
Shi by Journeys 56 0 0 56
Underground Station
Group 163 0 1 162
Lids Sports Group 922 3 9 916
Johnston & Murphy
Group 159 1 0 160
Shops 115 0 0 115
Factory Outlets 44 1 0 45
Total Retail Units 2,267 8 11 2,264
================== ===== === === =====
Constant Store Sales
Three Months Ended Six Months Ended
------------------ ----------------
July July
31, August 1, 31, August 1,
2010 2009 2010 2009
---- ---- ---- ----
Journeys Group 2% -9% 2% -3%
Underground Station
Group -4% -19% -2% -11%
Lids Sports Group 7% -2% 8% 3%
Johnston & Murphy
Group 0% -16% 5% -17%
---
Total Constant Store
Sales 3% -8% 4% -3%
==================== === === === ===
Schedule B
Genesco Inc.
Adjustments to Reported Loss from Continuing Operations
Three Months Ended July 31, 2010 and August 1, 2009
3 mos Impact 3 mos Impact
In Thousands (except per
share amounts) July 2010 on EPS July 2009 on EPS
--------- ------ --------- ------
Loss from continuing
operations, as reported $(2,396) $(0.10) $(2,663) $(0.12)
Adjustments: (1)
Impairment & lease
termination charges 1,143 0.05 2,114 0.09
Other legal matters 39 - (32) -
Flood loss 215 0.01 - -
Purchase price accounting
adjustment -margin 233 0.01 - -
Purchase price accounting
adjustment -expense 174 0.01 - -
Expenses related to aborted
acquisition 127 - - -
Convertible debt interest
restatement (APB 14-1) - - 172 0.01
Higher (lower) effective tax
rate (69) - 7 -
Adjusted loss from
continuing operations (2) $(534) $(0.02) $(402) $(0.02)
----- ------ ----- ------
(1) All adjustments are net of tax. The tax rate for the second
quarter of Fiscal 2011 is 35.1% excluding a FIN 48 discrete item of
$0.1 million. The tax rate for the second quarter of Fiscal 2010 is
37.29% excluding a FIN 48 discrete item of $0.3 million.
(2) Reflects 23.5 million share count for Fiscal 2011 and 21.8
million share count for Fiscal 2010 which does not include common
stock equivalents in either year due to the loss.
The Company believes that disclosure of earnings and earnings per
share from continuing operations on a pro forma basis adjusted for
the items not reflected in the previously announced expectations
will be meaningful to investors, especially in light of the impact
of such items on the results.
Schedule B
Genesco Inc.
Adjustments to Reported Earnings (Loss) from Continuing Operations
Six Months Ended July 31, 2010 and August 1, 2009
6 mos Impact 6 mos Impact
In Thousands (except per share July July
amounts) 2010 on EPS 2009 on EPS
---- ------ ---- ------
Earnings (loss) from continuing
operations, as reported $6,167 $0.25 $(8,266) $(0.41)
Adjustments: (1)
Impairment & lease termination
charges 2,582 0.11 4,883 0.24
Other legal matters 95 - 206 0.01
Loss on early retirement of debt - - 3,061 0.15
Flood loss 215 0.01 - -
Purchase price accounting
adjustment -margin 233 0.01 - -
Purchase price accounting
adjustment -expense 174 0.01 - -
Expenses related to aborted
acquisition 127 0.01 - -
Convertible debt interest
restatement (APB 14-1) - - 663 0.03
Higher (lower) effective tax rate 20 - 2,540 0.13
Adjusted earnings (loss) from
continuing operations (2) $9,613 $0.40 $3,087 $0.15
------ ----- ------ -----
(1) All adjustments are net of tax. The tax rate for the six months
of Fiscal 2011 is 39.7% excluding a FIN 48
discrete item of $0.2 million. The tax rate for the six months of
Fiscal 2010 is 40.3% excluding a FIN 48
discrete item of $0.1 million.
(2) Reflects 23.9 million share count for Fiscal 2011 and 20.5
million share count for Fiscal 2010 which
includes common stock equivalents in both years.
The Company believes that disclosure of earnings and earnings per
share from continuing operations on a
pro forma basis adjusted for the items not reflected in the
previously announced expectations will be meaningful
to investors, especially in light of the impact of such items on the
results.
Schedule B
Genesco Inc.
Adjustments to Forecasted Earnings from Continuing Operations
Fiscal Year Ending January 29, 2011
High Guidance Low Guidance
In Thousands (except per share
amounts) Fiscal 2011 Fiscal 2011
----------- -----------
Forecasted earnings from continuing
operations $45,569 $1.91 $43,220 $1.81
Adjustments: (1)
Impairment, lease termination and
other charges 6,931 0.29 6,931 0.29
----- ---- ----- ----
Adjusted forecasted earnings from
continuing operations (2) $52,500 $2.20 $50,151 $2.10
------- ----- ------- -----
(1) All adjustments are net of tax. The forecasted tax rate for
Fiscal 2011 is 40.2%.
(2) Reflects 23.8 million share count for Fiscal 2011 which includes
common stock equivalents.
This reconciliation reflects estimates and current expectations of
future results. Actual results may vary
materially from these expectations and estimates, for reasons
including those included in the discussion
of forward-looking statements elsewhere in this release. The Company
disclaims any obligation to update
such expectations and estimates.
SOURCE Genesco Inc.